European stocks surged this week by the most in a year, led by a rally in banks and mining companies after Greek lawmakers passed a five-year austerity package, qualifying the country for further aid.
The STOXX Europe 600 Index jumped 4.1 percent to 274.92 in the past five days, snapping eight consecutive weeks of losses. The gauge was still down 5.6 percent from this year’s high on Feb. 17 as US economic data trailed forecasts and concern mounted that Europe’s debt crisis would deepen.
“Greece was the big risk event for the week,” said Ioan Smith, a director at Knight Capital Europe. “Nothing has fundamentally changed, but the implication is that the temporary benefit of the austerity vote has bought time, comforted by the assumption that a new bailout plan is in the works.”
Greek Prime Minister George Papandreou this week won the backing of his country’s parliament to implement the 78 billion euro (US$113 billion) austerity package needed to qualify for further financial assistance from the EU.
Austrian finance ministry official Thomas Wieser said Greece could receive as much as 85 billion euros in new financing, including a contribution from private investors, in a second bailout aimed at stopping the country from defaulting. EU finance chiefs will hold a conference call this weekend to free up a 12 billion-euro payment overdue.
European Markets Rally
National benchmark indexes climbed in all 18 western European markets this week except Iceland. The UK’s FTSE 100 Index increased 5.1 percent, Germany’s DAX Index gained 4.2 percent and France’s CAC 40 Index jumped 5.9 percent. Greece’s ASE Index jumped 6.2 percent, the most since January.
Bank stocks were the best performing industry in the STOXX 600 this week, surging 7.6 percent, paced by Greece’s three biggest lenders. Eurobank, Alpha Bank SA and National Bank of Greece SA all surged 14 percent in Athens.
Lloyds led a rally in UK banks, surging 17 percent, its biggest weekly advance since August 2009. Britain’s largest mortgage lender said it would cut 15,000 jobs and reduce costs as the company withdraws from overseas units and increases its focus on the UK.
Standard Chartered PLC rose 10 percent after the UK’s third-largest bank by market value said first-half pre-tax profit could post “double-digit” growth from a year earlier.
Antofagasta soared 12 percent as copper climbed this week by the most since April. The copper producer’s CEO Jean Paul Luksic said in an interview that the company expected “huge demand” for metals as China and other emerging markets develop.
Vedanta Resources gained 13 percent, Kazakhmys PLC advanced 11 percent and Xstrata PLC jumped 9.3 percent this week.
London Stock Exchange Group PLC jumped 9 percent after the London and Toronto exchanges said they would not proceed with their friendly C$3.29 billion (US$3.4 billion) merger because they did not get the required two-thirds of votes cast by proxy before yesterday’s shareholder meeting.
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